A wrongful dismissal occurs when the terms of the employee’s contract are breached in the dismissal process. A wrongful dismissal claim can arise out of an actual or constructive dismissal.
It is important to distinguish between a wrongful dismissal and an unfair dismissal. The key concern with a wrongful dismissal is whether or not there has been a breach of contract. With an unfair dismissal claim, the concern is whether the dismissal was fair.
Notice may be statutory notice, or by an express or implied term of the contract.
Where the contract provides for an employer to follow a disciplinary or redundancy procedure, and this procedure is not followed correctly, an employee may claim for loss of earning for the period of time that the correct procedure would have taken.
Where a fixed term contract is terminated before the expiry date, this will be wrongful dismissal unless there is a term which allows early termination under certain circumstances. If the breach is the employer’s fault, they will have to pay damages for the remainder of the fixed term period.
If an employee has committed a repudiatory breach of contract, then as an employer, you may be entitled to dismiss then without notice. It is your decision whether you wish to accept the breach or affirm the contract. If you terminate the employee, then you accept the repudiatory breach. It is generally for the Employment Tribunal to decide what conduct is severe enough to amount to a repudiatory breach.
If you do not require an employee to work their notice period but decide to pay them in lieu instead, this will not give rise to an wrongful dismissal claim, as the employee would be in the same position they would have been in, had the correct notice been given.
An employee can claim for damages for the length of their contractual notice period. This includes all wages and benefits that they would have been entitled to in accordance with their contract, had they been allowed to work their notice period. An employee may try to claim for additional damages, such as discretionary bonus payments. However, this can be difficult to claim for.
The maximum amount of damages that an employee can claim in an Employment Tribunal is £25,000. However, there is no limit to the damages recoverable in the civil courts.
An employee has 3 months from the date of termination to bring a claim to an Employment Tribunal, or 6 years to bring a claim in the civil courts, either the County Court or High Court.